The Justice Department has announced a settlement with SouthEast Bank, requiring the bank to pay $1.5 million to settle claims of discriminatory lending practices in their student loan refinancing program. The allegations stated that the bank disproportionately discouraged and denied Black and American Indian/Alaska Native graduates from refinancing their student loans. Assistant Attorney General Kristen Clarke emphasized the importance of equal opportunity in refinancing student loans, highlighting that SouthEast Bank’s policies were not based on applicants’ merits or repayment abilities.
The complaint, filed in the Eastern District of Tennessee on January 18, accused SouthEast Bank of using eligibility criteria that automatically excluded graduates from schools with high default rates. This policy disproportionately affected Black and AI/AN graduates, with Black bachelor’s degree recipients being 4.3 times more likely to be excluded compared to their non-Black peers, and AI/AN recipients being three times more likely to be excluded. Moreover, the policy excluded graduates from up to 84.4% of majority-Black schools while affecting no more than 21.1% of non-majority-Black institutions.
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The consent order, pending court approval, mandates SouthEast Bank to compensate affected applicants, enhance access to refinancing for graduates from previously excluded schools, and provide financial education to these students. This investigation stemmed from a referral by the Federal Deposit Insurance Corporation, and SouthEast Bank has cooperated fully with the Justice Department throughout the process.
For more information on the Civil Rights Division’s initiatives, visit their website at justice.gov/crt. To report discriminatory practices, individuals can use the Civil Rights Division’s online portal at civilrights.justice.gov.
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